Action Fraud figures show that victims of investment fraud lost at least £657m in 2020, as scammers preyed on financial vulnerability caused by the coronavirus pandemic.
There are different types of investment fraud, the most
common involve shares, bonds, cryptocurrency and commodities such as wine, fine
art and diamonds. Fraudsters contact you unexpectedly, promise generous returns
and may say that the opportunity is time limited. They downplay the risks to
your money. They call you repeatedly and keep you on the phone a long time in
order to build your trust, stop you speaking to other people or having time to
think about the offer.
The second stage of these frauds is known as a Recovery
Fraud where victim details are passed onto other fraudsters who try to take yet
more money. They say that they have been appointed to help and ask for a
refundable upfront fee. They often use the details of cloned companies ie
genuine companies whose details have been hijacked, in order to reassure
investors. Reports of ‘clone firm’ investment scams increased by 29% in
April 2020 compared to March, when the UK went into its first lockdown.
How to avoid investment scams
Reject cold calls. If you’re called about an investment
opportunity, the safest thing to do is just hang up.
Check an investment opportunity using the Financial
Conduct Authority (FCA) Warning List online tool.
Check that the investment company is on the FCA Financial Services Register.
Don’t feel pressurised or rushed into making a decision.
Always seek advice before investing, ideally from an Independent Financial
Adviser who is authorised by the FCA.
If you’re not sure whether a scheme or investment offer is a
scam, contact the Citizens Advice consumer helpline on 0808 250 5050 for
advice. Report a fraud to Action Fraud on 0300 123 2040.
A increase in cyber-fraud across the world means that we all
need to learn how to spot and avoid different types of fraud and cybercrime.
An emerging tactic used by fraudsters is the ‘spoofing’
(cloning) of telephone numbers. A decade ago, anyone receiving a suspicious
call could look up the number that was calling them to check its legitimacy. No
longer is this sufficient advice.
Fraudsters can now clone numbers used by legitimate organisations,
your local bank, HMRC, or even local police station, to make it look like that
organisation’s genuine number is calling you. The fraudster claims to be
from that organisation and tries to convince you to do what they
say. This means you cannot rely on your Caller ID display to tell
you who is calling you.
Protect yourself:
Beware unexpected phone callers, whoever they claim to
be. If in doubt, never divulge personal details over the phone to someone
who has called you. The more you say to a fraudster the more information they
have. Don’t be afraid to hang up. Contact friends or family for advice.
Don’t trust your caller ID display to verify a call, contact
the genuine organisation using a number that you have independently researched.
Before doing so, ensure the call has ended and the line has cleared, wait five
mins (Some scammers can simulate the sounds of lines clearing to dupe you into
dialling while the line is still live), or make the call via a separate phone
line where possible.
Institutions such as HMRC, police and banks will never call
you to tell you that you/your money is under investigation; nor would they ever
ask you to transfer or hand over money/assets for such a purpose.
Report all scams online to www.actionfraud.police.uk or call 0300 123 2040 giving
as much information as possible.
Financial education and literacy is not taught in schools,
which is why most people are in the dark when it comes to personal finance and
are forced to rely on financial advisers.
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